On dissolution, unrecorded liabilities, when paid are shown in:
Answer & explanation
Correct answer: option 1
The correct answer is option 1- Debit of Realisation Account.
For settlement of any unrecorded liability-
Realisation A/c Dr.
To Bank A/c
(Payment of unrecorded liability)
Bank balance is reduced so it is credited and realisation account is debited for the unrecorded liability.